Student leaders for the Dwight Hall Socially Responsible Investing initiative co-filed a shareholder resolution with ExxonMobil that was voted on at the company’s annual meeting in May. While the outcome was not what students had hoped for, the experience motivated the team to continue to explore how shareholders can best influence corporate reform.

The Exxon Annual Meeting: Written by the First Ever Students to File a Shareholder Resolution

First, we want to give a BIG thank you to everyone who helped us file and present the resolution! We learned so much throughout the process, and really could not have been successful without you all.

What it was Like to Attend Exxon’s Annual Meeting

Although our expectations were tempered, we arrived in Dallas last Wednesday with the belief that Exxon’s Annual Shareholders’ Meeting would offer some dialogue between investors and Exxon’s CEO, Rex Tillerson. We hoped that Tillerson would truly consider and engage with shareholders’ ideas and questions.

Our hopes were not met. Exxon management opposed every single shareholder resolution, failing to acknowledge the real investor discontent shown by tens of billions of shareholder dollars supporting the resolutions. After presenting resolutions, shareholders heard: “Thank you [speaker], the board recommends a vote against this proposal as outlined on page [X] of the proxy statement”, and then the next proposal was presented. This became a refrain throughout the meeting, signaling to shareholders in the audience that the board had not designed the shareholder meeting as an opportunity to hear shareholder’s opinions or to engage in open dialogue. Most if not all of Exxon’s shareholders had already decided their votes before the meeting; the presentations in support of each resolution did not sway any votes.

In the comment period, with the exception of one climate denier and a man who tearfully proclaimed his love for the CEO, Tillerson did not sufficiently address the content of questions, nor did he allow any room for discussion. Tillerson was a politician, often answering direct questions with vague and semi-related responses. In one instance, he made an irrelevant reference to the first amendment to avoid a question that challenged Exxon’s contradictory lobbying policy.

It seemed to the shareholders presenting resolutions that the meeting was intended to make us feel that we have an ability to affect change within the corporation. But it is easy to see that engaging with Exxon’s management at the meeting isn’t really a dialogue, because they aren’t listening; it’s more like talking and hoping that the press picks up on the passion and logic of the arguments made, and that the media coverage pressures Exxon to take seriously the concerns of its shareholders. It remains to be seen whether Exxon will respond to existing media pressure. So we decided to create our own, watch out Exxon!

What Everyone Missed at Exxon’s Annual Meeting

After coming back from Exxon’s meeting, we were excited to see how the media reacted. There was great coverage of the passage of a proxy access resolution, and many news outlets mentioned Tillerson’s view that we still need fossil fuels. But we believe the media missed some important points to come out of the meeting.

First, Tillerson got away with a questionable statement about the viability of renewables. Tillerson talked about the balance between fighting climate change and meeting the world’s energy needs, implying that more of one means less of the other. He said that the only way to get people out of poverty is to “provide them the energy sources we have today, and that’s why we continue to believe fossil fuels will have a significant and important role to play for as far as we can see, and no government studies disagree with that”. However, the National Renewable Energy Lab, the Intergovernmental Panel on Climate Change (IPCC), and others “disagree with that”. The paradigm in which Tillerson operates, one that pits the environment against the economy, is outdated.

The media also missed a stunning display of Exxon’s hypocrisy.

Exxon funds the American Legislative Exchange Council (ALEC), which along with obstructing climate policy, recently told attendees of its annual meeting that “The biggest scam of the last 100 years is global warming”. Exxon is also represented on the board of the American Petroleum Institute, which claims that the science of climate change is unsettled. However, Exxon claims to not “fund or support those who deny the reality of climate change”.

Tillerson, when asked to explain these contradictory positions, said: “We will never withdraw our support for people to express their free speech opinions on any matter whatsoever. And the fact that people have different opinions on climate change, they have every right to their opinion. Whether we agree with it or not, I will support their right to say so”.

Such a statement is absurd! Exxon can and should use its own first amendment rights to choose to fund different lobbying organizations. Shell, for example, left ALEC because its “stance on climate change is clearly inconsistent with our own”. Exxon could also use its leadership positions within ALEC to move the organization in a better direction.

The media also failed to pick up on Exxon’s lack of commitment to its public position that “the risk of climate change is clear and the risk warrants action”. A shareholder spoke out in disagreement, denying climate change. Rather than defending his company’s public position, Tillerson thanked the speaker and moved on.

Final Takeaways From the Meeting

Some of us were encouraged at the progress that appeared to be made at the meeting. It was the first time that college students representing their institution ever filed a proposal and attended a meeting. It was the first time a resolution at Exxon passed. Even though our resolution failed, it still had about $95 billion of support. And we were all very impressed by the work of the other people and organizations who filed resolutions.

On the other hand, nobody in the crowd clapped for a single climate change resolution. It would have been encouraging to see shareholders in the building cheering for the climate resolutions, sending a message to Exxon’s management. Instead, the audience was an echo chamber for Exxon’s words, applauding Tillerson’s justification of continued funding of ALEC and its lack of commitment to the IPCC’s temperature targets.

So after all this, we were left with the question of impact. While the annual meeting did achieve significant media coverage and publicity, it did not succeed in changing Exxon’s policy. Prior to the meeting, we spoke with Exxon’s investor relations on the phone, outside of the context of the general meeting. That dialogue went nowhere as well, as the company resisted policy change, giving weak justifications for its continued membership in ALEC.

Though shareholder engagement over the past two decades has led to tangible shifts in Exxon policy, it seems that the way to meaningfully influence Exxon through the shareholder engagement process is with the support of major institutional investors. According to Ceres, a leading group in the shareholder engagement space, “Institutional investors are key drivers of the global economy. Their decisions about how and where to deploy capital can shift company behavior and the broader economy in profound ways towards a more sustainable future.” Although resolutions this year saw an increase in institutional support, major funds still voted with Exxon’s management. It will take quite some time to garner enough support to pass significant climate resolutions.

And this leads us to the question of what we should do next. How could we best use our investment in Exxon to fight climate change? Some of us think we should divest to disassociate from a morally reprehensible company, with the hope that others might follow. We unsuccessfully tried to influence Exxon, saw its response, and now should do what the Ethical Investor, Yale’s moral guidebook for investing, recommends: exit when voice is not effective in remedying social injury. Others, however, recognizing that the Ethical Investor is focused on impact, think that while Yale’s divestment would likely have a large impact on climate change, a Yale socially responsible investment group’s $2,000 divestment would likely fail to inspire broader action. We may have the most impact by using our position to build support from larger shareholders and continuing to pressure Exxon. However, we don’t know if our continued engagement will be effective.

We have some tough decisions to make. Either way, we learned a lot throughout this process and are more motivated than ever to continue our work.